The principal iron uptake system of Saccharomyces cerevisiae utilizes a reductase activity that acts on ferric iron chelates external to the cell. The FRE1 gene product is required for this activity. The deduced amino acid sequence of the FRE1 protein exhibits hydrophobic regions compatible with transmembrane domains and has significant similarity to the sequence of the plasma membrane cytochrome b558 (the X-CGD protein), a critical component of a human phagocyte oxidoreductase, suggesting that FRE1 is a structural component of the yeast ferric reductase. FRE1 mRNA levels are repressed by iron. Fusion of 977 base pairs of FRE1 DNA upstream from the translation start site of an Escherichia coli lacZ reporter gene confers iron-dependent regulation on expression of beta-galactosidase in yeast. An 85-base-pair segment of FRE1 5' noncoding sequence contains a RAP1 binding site and a repeated sequence, TTTTTGCTCAYC; this segment is sufficient to confer iron-repressible transcriptional activity on heterologous downstream promoter elements.